**MNI 5 Things: US Core PCE Prices +0.2%; Y/Y Up To +1.6%>

--5 Things We Learned From February Personal Income Data

By Kevin Kastner, Holly Stokes, and Sara Haire

     WASHINGTON (MNI) - The following are the key points from the 

February personal income, spending, and price data released Thursday by 

the Bureau of Economic Analysis: 

     - The data suggest inflation remains contained, but there were 

modest upward movements to the year/year rates. However, core inflation, 

income, and PCE were all on expectations, so the market reaction is 

likely to be muted. 

     - The core PCE price index rose 0.2%, (+0.228% unrounded), as 

expected, after a 0.3% gain (+0.288%) in January. The y/y rate ticked up 

to 1.6% after holding at 1.5% in the previous four months. The rate is 

the highest since April, but still well below the 1.9% rate in the same 

month a year ago. The overall PCE price index also rose 0.2% after a 

0.4% January gain, as energy prices fell by 0.1% in the current month. 

The y/y rate rose to 1.8% after 1.7% gains in the last three months. 

     - The savings rate rose to 3.4%, its highest since August 2017, up 

from 3.2% in January and 2.4% in December, but it remains well below the 

4.1% rate a year ago. Some analysts note that the declines in the 

savings rate over the last year have been key in supporting consumption, 

as consumers are confident enough about the economy and the job market 

to shift from saving to spending. However, an MNI analysis Wednesday 

suggests that much of that spending is coming via credit cards rather 

than excess cash. 

     - Personal income rose 0.4%, as expected, led by another solid 

increase in wages and salaries and gains in proprietors' income, income 

on assets, and rental income. Personal taxes rose 0.7% after a 3.2% drop 

in January, so disposable personal income posted a more modest 0.4% 

increase after a 1.0% jump in January. 

     - Current dollar PCE was up 0.2%, as expected. Real PCE was flat 

after a 0.2% decline in January, so the first quarter average was up 

only 0.6% at an annual rate from the fourth quarter. PCE was up 4.0% in 

the fourth quarter GDP report. 

     ** MNI Washington Bureau: 202-371-2121 ** 

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